Most Large Organizations Establish Responsibility Centers (Sections,departments,divisions,etc Required:
1)Three Commonly Found Responsibility Centers Are Cost Centers,profit Centers,and

question 67

Essay

Most large organizations establish responsibility centers (sections,departments,divisions,etc. )in order to delegate decision-making authority to the individuals who are best suited to make decisions in those particular centers.Consider the following responsibility centers:
Responsibility Center Description $\begin{array}{|l|l|}\hline \text { 1) } & \text { Louisville office of a regional CPA firm } \\\hline \text { 2) } & \text { Restaurant in a Nordstrom department store } \\\hline \text { 3) } & \text { Medical diagnostic equipment unit of General Electric } \\\hline \text { 4) } & \text { Maintenance department in a Toyota assembly plant } \\\hline 5) & \text { Cincinnati outlet of the Hampton Inn hotel chain } \\\hline \text { 6) } & \text { Home electronics division of Best Buy } \\\hline \text { 7) } & \text { Lawnmorver division of Honda } \\\hline \text { 8) } & \text { Finishing department of a company that makes wooden fencing } \\\hline 9) & \text { Engine assembly department of John Deere } \\\hline \text { 10) } & \text { Customer service department of United Airlines } \\\hline \text { 11) } & \text { Check processing department of Citibank } \\\hline \text { 12) } & \text { Casting department of a small steel mill } \\\hline \text { 13) } & \text { Jeep division of Chrysler Motors } \\\hline \text { 14) } & \text { Denver location of Barnes and Noble } \\\hline \text { 15) } & \text { Baltimore office of an investment banking firm } \\\hline\end{array}$ Required:
1)Three commonly found responsibility centers are cost centers,profit centers,and investment centers.Describe each type of center.
2)Which type of center will each most likely be classified as: a cost center,profit center,or investment center?

---

Definitions:

Royalties

Payments made by one party to another for the right to use intellectual property, such as music, books, or patents, on an ongoing basis.

Creative Destruction

Creative destruction is an economic concept describing the process by which new innovations lead to the demise of older technologies or businesses, thereby fostering growth and economic progress.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the financial gain in excess of the opportunity costs.

Production Costs

Expenses incurred in the process of creating or manufacturing a product, including materials, labor, and overhead costs.